CHINA AND THE U.S. – THE NEW DYNAMIC DUO

China and the US: The potential of a clean-tech partnership; Only a collaboration between the two countries will create an environment where clean-energy technologies can thrive.
Jonathan Woetzel, August 2009 (McKinsey Quarterly)
and
How China and the US will set the global climate agenda; The Brookings Institution’s Ken Lieberthal discusses the opportunities he sees for a China–US clean-energy partnership going into December’s climate change conference.
August 2009 (McKinsey Quarterly)
and
China announces detailed pledge to curb carbon emissions; President Hu Jintao vows to greatly decrease intensity from country's economy and invest in green energy
Julian Borger and Suzanne Goldenberg, September 22, 2009 (UK Guardian)

SUMMARY
Speeches by U.S. President Barack Obama and China President Hu Jintao at the United Nations raised hopes for the successful working out of a new international agreement on which the world can base its fight against global climate change

The U.S. and China represent such a significant portion of the world’s greenhouse gas emissions (GhGs) and economic energy that if this new rhetoric from the Dynamic Duo (or the G-2, as the premier researchers at McKinsey & Company call them) leads to real action, it could - in conjunction with the on-going commitment from the European Union - potentially turn the tide in the fight to stop spew and control the world's fever.

Environmentalists, fruitlessly hoping for politicians to sound like something other than politicians, found the Presidents’ remarks to be essentially rhetorical. Perhaps they were. Whether the rhetoric sustains GhG-cutting action in the U.S. and China and leads to a new international agreement on building a New Energy economy for the world will begin to become clear this December in Copenhagen.

From USdepartmentofenergy via YouTube

COMMENTARY
Many important things were said at the United Nations summit on climate change. President Sarkozy of France, for instance, said that if the U.S. and the emerging economic powerhouses don’t commit themselves to greenhouse gas emission (GhG) cuts, the EU will have no choice but to impose a protective import tax. The obvious intention of such a tax is to make goods manufactured without a price on emissions competitive with those made in the EU. The unfortunate co-impact would be the setting off of an international trade war.

By far the most important speeches, however, were made by U.S. President Obama and China President Hu Jintao at the top of the morning. And by far the most important commitment made was the one with which President Hu closed his speech.

President Obama started the morning with 4 key points:
(1) He affirmed his administration’s understanding of and commitment to dealing with global climate change through a deal at the upcoming world summit in Copenhagen to finalize an international treaty to succeed the Kyoto Protocol.
(2) He talked about the major strides the U.S. has made in New Energy, Energy Efficiency and GhG reductions.
(3) He laid out a basic pattern for the Copenhagen agreement that will require a separate type of commitment from 3 separate categories of nations:
(a) The advanced developed nations must commit to further major GhG reductions;
(b) Emerging economies must make very real and binding commitments to perhaps not as large but nevertheless significant emissions cuts; and
(c) The smaller and still developing economies must get the kind of technological and financial support they need from the developed and emerging economies.
(4) He called for a “pragmatic” and “flexible” but unified world effort against global climate change.

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President Hu also began his speech with 4 key points:
(1) Dealing with global climate change is a major challenge to the survival and development of humankind. Every nation has responsibilities. China’s 2005 through 2010 commitments to mandatory national energy intensity goals, reductions of major pollutants, protections against deforestation and building more New Energy demonstrate its seriousness of purpose.
(2) The goal of action should be win-win outcomes. It is in the self-interest of the advanced developed nations to support the emerging economies and the still developing nations.
(3) Because the goal should be toward development, each nation’s obligations must be matched to its stage of growth and its needs.
(4) Financing and technology sharing are the keys to success.

Then he committed his nation to:
(1) Greater efforts at Energy Efficiency, energy conservation and energy intensity;
(2) More development of New Energy and nuclear energy, aiming to obtain 15% of China’s power from non-fossil fuel energy by 2020;
(3) Increased efforts at reforestation;
(4) The stepped-up building of a “green” New Energy economy through increased research, development and deployment of New Energy technologies.

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Premier research from McKinsey & Company identifies 3 areas of New Energy where a joint effort from the U.S. and China, the G-2 Dynamic Duo, could potentially lead the world in turning back global climate change: Battery Electric Vehicles (BEVs), Concentrating Solar Power Plants (CSPs) and Carbon Capture and Storage (CCS or “clean”) coal technology.

McKinsey’s conclusions make news because they are regarded as conservative, fully-substantiated and mainstream. For this reason, it is exciting to see them include BEVs and CSPs, technologies that just a year or 2 ago would have been too cutting edge and unproven to be considered by McKinsey.

For the same reason, it is disheartening but understandable to see McKinsey holding on to the false but undeniably seductive hope of “clean” coal technology. Capturing, transporting and sequestering the greenhouse gas emissions from burning coal has been shown over and over to be too expensive, unwieldy and potentially unsafe an undertaking to be anything but a fantasy. (See COAL EXEC ADMITS “CLEAN” COAL IS UNLIKELY & TOO EXPENSIVE)

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Here's the good news. McKinsey offered up a pair of factoids: If the majority of personal transport vehicles in 2030 were BEVs (which some studies suggest is within the realm of possibility), transport sector emissions would be 42% reduced. That can’t “even come close to happening” without China and the U.S. kick starting the process.

McKinsey proposes that the G-2 support private investment by jointly opening their markets, providing global scale for successful vehicles, batteries, charging stations and ancillary technologies. This would not harm either individual market but double the potential for success.

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McKinsey proposes the G-2 combine their resources on pilot CCS projects. Good idea. It would reduce the wasted RD&D investment and allow both nations’ Old Energy diehards to simultaneously convince themselves of the unworkability of “clean” coal.

Apparently oblivious to pioneering work in solar power plant technology by Spain’s New Energy powerhouses or of EU ambitions to build enough CSPs in North Africa and the Middle East to power all of Europe, McKinsey claims CSP technology is too emergent to have a future without big backing from the G-2. Be that as it may, McKinsey’s proposal for a U.S.-China cooperative standard-setting and pilot project effort makes a lot of sense.

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Added benefits to China-U.S. cooperation on New Energy: (1) Increased trust between governments with real differences, and (2) Meaningful reductions in oil consumption by the world’s two largest importers.

Challenges, which McKinsey sees as “manageable” in comparison with the potential benefits: (1) Overcoming wariness about sharing proprietary information, (2) Creating implementation and management frameworks, cofinancing mechanisms, partnership rules, and governance models, and (3) Establishing intellectual property (IP) protections.

The most important reason for China and the U.S. to work together: So the self-absorbed fossil fools in each country who use the other country as an excuse for not acting to cut emissions and turn back climate change will have to shut up.

QUOTES
- Asad Rehman, Senior International Climate Campaigner, Friends of the Earth: "Barack Obama's speech was deeply disappointing - it was a huge missed opportunity which does nothing to break the logjam in international climate negotiations…It's time for the president to say 'yes we can' to the growing calls for US leadership on this crucial issue."
- Barbara Stocking, Director, Oxfam International: "It sounded like Hu was being positive about moving forward together but he didn't put any [major] new things on the table which is a shame at this stage in the negotiations…Fundamentally what we need is for the leaders to come out now to set the tone for the whole deal."
- McKinsey Quarterly: “Electrified vehicles, carbon capture and storage (CCS), and concentrated solar power, among other emerging “green tech” sectors, will need massive investment, infrastructure, and research to get off the ground. While the Chinese and US governments, along with private investors, are pursuing all of these technologies, they cannot achieve separately what they could jointly…[C]ollaborating formally or informally, China and the United States working as a group of two (or G-2) dedicated to climate change would boost these technologies and deliver benefits that would accrue to all nations…”

As true in China as in the U.S. (click to enlarge)

- McKinsey Quarterly: “Assuming engineers find solutions to the technical and storage hurdles, we estimate that by 2030 this technology could “clean” 17 percent of coal power in the United States and 30 percent of China’s coal power, reducing total combined emissions by as much as 7 percent—a significant benefit to both nations and to the world.” (Right. And assuming NewEnergyNews had the advertising budget and readership of the New York Times, nobody would be making such lame assumptions in 2010.)
- McKinsey Quarterly: “If clean concentrated solar power is scaled to generate 22 percent of total power in China and the United States by 2030, it could create over half a million jobs in each country.”
- Kenneth Lieberthal, senior fellow and director of John L. Thornton China Center, Brookings Institution: “…[A]lmost everywhere you look, you see this kind of opportunity available. And the rapidity of the change and attitude on this issue—on the clean-energy issue and the capacity to cooperate on it—has been absolutely startling. Face it, any objective analysis of what has to be done in order to get ahead of the curve in dealing with climate change has to leave you very, very worried…[A]t best, you’ve got to be somewhat pessimistic—the numbers are so bad and the trend lines are so challenging. But having said that, if you look at the capacity to at least begin to work seriously on this issue, I think one has to be quite optimistic. This has really shifted very, very rapidly recently…I’m not sure whether Copenhagen is going to get a deal done, but I think that the momentum is now shifting in the direction of getting a deal done. I think Copenhagen can mark a major step on the way to a deal that will come in the year or two after that and will actually be very serious. So, there’s some good news even in a macropicture that is very sobering.”